No Substitute for Experience

Every time the financial markets go through a boom period, you'll hear warnings from the greybeards about young hotshots who haven't lived through an extended bear market, be they financial advisors, traders, money managers, investment bankers, or whatever. The rap is that they are insufficiently attuned to risk or concerned about protecting against the downside, a complaint echoed by a leading hedge fund manager, Kenneth C. Griffin, in a recent New York Times article.

Even more interestingly, Griffin blames inexperienced CEOs. More specifically, with the growth of financial conglomerates, which the article calls "big, universal banks," the typical CEO of such a firm rarely has much experience beyond the sales function. Add up all this top-to-bottom lack of experience in key functions, and Griffin sees inevitable disasters.